5  CVPDC Housing Market Assessment

The following provides a regional-level analysis of major trends impacting housing within Central Virginia Planning District region. All data has been aggregated to the regional-level and includes:

5.1 Takeaways

  • Population growth as a result of domestic migration due to COVID-19 pandemic
  • Growing renter population — particularly a growing higher income renter population
  • More and more smaller households coming to the region
  • Continuing income disparities — between white and Black households
  • Loss of smaller sized housing

5.5 Housing stock

The bulk of the region’s housing stock is composed of single-family housing (74 percent). Much of the single-family housing stock resides in homeownership, but in 2015 single-family housing decreased roughly two percentage points from homeownership towards rental. Manufactured homes, which is included in the Other category, has continued to make up the second largest portion of the region’s housing stock (10 percent overall).

Rental housing stock is diverse and has grown to include duplexes, tri-plexes, and quads, as well as larger multifamily properties. While these smaller multifamily properties like duplexes once made up nearly two percent of the homeownership market, they have reduced to a half of a percent of the region’s entire housing stock.

Options like these have been touted as Missing Middle Housing, which are able to offer affordable homeownership options.

Figure 5.15: Regional housing stock by structure type

Most of the region’s housing is surpassing 20 years in age. A construction boom in the late 20th century (from 1960 to 1999) contributed to much of the region’s homeownership and rental housing stock. With aging housing stock, housing quality becomes an ever-present issue.

Figure 5.16: Regional housing stock by year built

The number of smaller bedroom homes has been declining since 2010, particularly within the existing homeowner housing stock. From 2010 to 2021, there was a loss of 2,435 two-bedroom homes in homeownership. Some of that loss could be accounted for in a transition to rental, but two-bedroom rentals only increased by 1,487. One-bedroom rentals, often in-demand by young professionals, as well as those most in need, also so a decline (-191), but two-bedroom rentals accounted for much of the growth in the rental market.

Larger homes with three or more bedrooms saw the greatest increase in the region. Although larger homes are meeting a demand, they often come at the expense of affordability.

Figure 5.17: Change in regional housing stock by bedroom count

Manufactured housing communities are spread out across the region. These homes often serve as market-rate affordable housing, but they are face several challenges, including risk of redevelopment, poor housing quality, and aging infrastructure.

There are 99 manufactured home communities in the region. Three quarters of the communities in the region are small, consisting of less than 50 homes.

Note

Insert information about MHC tenure and issues.

Figure 5.18: Map of manufactured home communities

Figure 5.19: Manufactured home communities by size

The region has still not recovered to its Great Recession building-levels, when residential building permits peaked at 1,840 in 2005. Since 2012, permits have only averaged at 768 per year, less than half of what it was in 2005.

In addition, the early 2000s saw a greater number of two to four bedroom homes. But by 2005, these diverse types of housing were nearly non-existent from the building pipeline in the region.

Figure 5.20: Regional residential building permits

5.6 Homeownership market

The regional homeownership rate has been on a slow decline in the last decade, from 72 percent in 2010 to 70 percent in 2021.

Figure 5.21: Regional homeownership rate

As the homeownership rate has declined slightly, the regional median residential sales price has continued to climb in recent years. Although fluctuating between $180,000 and $225,000 between 2016 and 2019, the region saw a major bump in early 2020 as the pandemic impacts hit the region’s housing market that have kept home prices well-above $225,000 ever since.

Figure 5.22: Regional median residential sales price

The impact of the pandemic is most noticeable when looking at the number of closed home sales and average days on market. The region saw record high closed home sales during the summers of 2020 and 2021, when it hit 435 sales in June 2020 and then 448 in June 2021.

Figure 5.23: Regional number of closed home sales

The demand in the region is further exemplified by the dramatic decline in average days on market. Already on the decline since 2017, the region hit record low average days on market in middle of 2021. Since then, homes have remained below an average of 40 days on the market.

With increasing mortgage interest rates in recent months, home sales, as well as prices, have seen declines. But prices will continue to rise, although not as rapidly as during the early aughts of the pandemic when record low interest rates opened up housing opportunity for many who could not have afforded a home otherwise.

Figure 5.24: Regional average days on market

5.7 Rental market

Average rent for the region has been relatively flat since 2016. The average market asking rent was $1,049 in the first quarter of 2016. By the fourth quarter of 2022, the typical rent in the region had only increased by $3 to $1,052.

Figure 5.25: Regional average market asking rent

In spite of the minute changes in average rent over the past few years, the rental vacancy rate took a major dip in the second half of 2020, reaching a low of 3 percent in Q3 2021. Rental vacancy has increased since the end of 2021, but has yet to reach pre-COVID-19 levels.

Figure 5.26: Regional rental vacancy rate

5.8 Affordability

Housing affordability is most often defined by housing where a homeowner or tenant is spending no more than 30 percent of their income on their housing costs. Those households that spend more than 30 percent are considered housing cost-burdened. This metric is a standard measurement for housing affordability, especially in terms of state and federal programs.

In the region, there was a total of 23,419 cost-burdened households in 2021, fifty-three percent of which were renters. This 2021 estimates is a 12 percent decrease from 2010 (-3,123), when the total cost-burdened households was 26,542. At that time, 59 percent of those cost-burdened households were homeowners, indicating a major shift in who is cost-burdened in the region.

Figure 5.27: Regional change in cost-burdened households by tenure

Figure 5.28: Total regional housing cost burden by household area median income

Figure 5.29: Regional cost-burden by household type